Australian 10-year bond yields at 3-1/2 week low after Q2 GDP misses market expectations

The Australian 10-year bond yields slumped to 3-1/2 week low Wednesday after the country’s second-quarter gross domestic product (GDP) missed market expectations, albeit rising from the previous reading in Q1. 

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 6-1/2 basis points to 2.61 percent, the yield on 15-year note plunged nearly 7 basis points to 2.90 percent and the yield on short-term 2-year traded 4-1/2 basis points lower at 1.84 percent.

Australia’s GDP expanded by 0.8 percent in the second quarter from the first quarter and 1.8 percent from a year earlier, new data shows. Economists had expected 0.9 percent growth on quarter and a 1.9 percent on-year growth. First quarter growth was left unchanged at 0.3 percent on-quarter.

The strong growth in the quarter also supports the optimistic outlook offered by the Reserve Bank of Australia this week, even though it kept official interest rates unchanged at a record-low 1.5 percent for the 13th month in a row.

"I anticipate that based on these figures today and other data that has come that we will achieve better than the budgeted outcome for the fiscal year of 2016-17," The Australian reported, citing, Australian Treasurer Scott Morrison.

Meanwhile, the S&P/ASX 200 index fell 0.16 percent to 5,654.50 by 03:20 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -13.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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